Thursday, August 30, 2012

Property investment in Asia resilient amid slowdown

Amid the global economic slowdown and China’s weak outlook, Asia’s real estate market is expected to see continued investment demand buoyed by interest for greater diversification and strong yields, according to Pacific Star Group’s Asian Property Outlook and Strategy report.

The biannual report revealed that the overall macro outlook is the biggest challenge for Asia’s property investment market. The global economy is now in a state of inflection as its recovery for 2013 and beyond would be the basis for recovery in many markets.

Asia’s growth prospects have also been dampened as an economic slowdown looms over China.

Nonetheless, the Singapore, Bangkok and Kuala Lumpur property markets are expected to fare better due to favourable domestic conditions and strong tourism growth.

Pacific Star favours Singapore’s office sector as strong leasing demand from non-financial segments make up for the relatively weaker demand from the financial sector.

Bangkok’s rents have also remained firm while enquiries continue to increase driven by the improving post-flood economic environment and strong supply pipeline.

However, Pacific Star refrained from classifying any residential markets in Tier 1 as markets across Asia continue to face pressures from previous policy tightening measures.

“While we’re optimistic about continued interest in Asian real estate, we’re also at a juncture where any further deterioration in the macro outlook can drastically impact returns,” said Lam Chern Woon, Vice President of Research and Strategic Planning at Pacific Star.

“Given this, it’s all about entering the market at the right time. So timing is key for investors. Nonetheless, Asia will continue to stand out because of its resilience supported by domestic demand and wider policy options, even in the face of muted prospects in the US and Europe.”

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